Internal war hurt Leighton: execs

Former execs allege internal tensions, Hochtief uncertainty hurt governance.

Former Leighton Holdings (LEI) executives have alleged that internal divisions at the company, along with Leighton's largest shareholder, Hochtief, being vulnerable to a takeover, created conditions that contributed to questionable corporate governance decisions, according to The Australian Financial Review.

The newspaper quoted anonymous former executives who said that in the year, 2010, that former Leighton chief executives Wal King and David Stewart were allegedly aware of kickbacks paid to secure Iraqi contracts, Mr King was locked in a disagreement with Hochtief over whether Mr King would remain chief executive.

“Wal desperately wanted to stay, so he couldn't have any bad news, he had to keep the company and the share price growing,” a former executive reportedly told the AFR.

Mr King has insisted he had no knowledge of the alleged corruption. But the AFR said former executives claim Leighton's senior management were reluctant to admit that Leighton had stretched itself too thin financially by taking on too many contracts.

The AFR added that at the time Hochtief was distracted by the ambitions of one of its minority shareholders, Grupo ACS, which prompted it to focus on share price performance over corporate governance.